During the month of February 2025 Amendments to the tax legislation of Georgia

Kreston Georgia continues to review tax law changes and updates. This time, we offer an overview of the legislative news introduced in the month of February 2025.

Table of Contents

1. Changes in the orders of the Minister of Finance of Georgia

1.1 The rules for canceling tax registration have changed for certain individuals.

2. Other changes

2.1 Changes to the Rules for the Administration of Pension Contributions

1. Changes in the orders of the Minister of Finance of Georgia

1.1. The rules for canceling tax registration for certain individuals have changed.

On February 2025, 7, an amendment to the Order of the Minister of Finance N996 “On Tax Administration” was published and entered into force immediately upon publication. The amendment concerns Article 7 of the Order.1Article 11, which determines the procedure for canceling the tax registration of a person registered as a taxpayer by the tax authority.

As a result of the change, a new 13th paragraph was added to the order.1 Article, as a result of which the grounds for refusing to cancel tax registration were separately determined (the general rule no longer applies) for a legal entity under public law, a budgetary organization, and an organization with diplomatic and equivalent status. In particular, the aforementioned entities may be refused to cancel tax registration if one of the following circumstances exists:

a) the cancellation of the person's tax registration has already been recorded in the taxpayer register;

b) the documents provided for in this Article have not been submitted in full;

c) The documentation submitted for the purpose of canceling tax registration does not confirm the relevant authority of the decision-making person and/or the decision-making capacity of the decision-making entity;

d) An application for cancellation of tax registration has not been submitted by an authorized person.

Therefore, as a result of the amendment, the following points are no longer grounds for refusing to cancel tax registration for a legal entity under public law, a budgetary organization, and an organization with diplomatic and equivalent status, as defined in the wording prior to the amendment:

• The person has tax debts;
• A tax audit is underway or a notification has been sent about the appointment of a tax audit;
• The person has registered real estate and movable property;
• The person has not removed the cash register from the register;
• The person has not executed the opening of a document equivalent to a check;
• The person has not issued a physical tax invoice (including a special tax invoice);
• The person does not have a closed last bank account at a banking institution.

Please note that in the cases provided for in the above (in particular, subparagraphs "b"-"d"), the taxpayer will be given at least 15 days to correct the existing deficiency. If the deficiency is not corrected within the established period, the tax authority will make a decision to refuse to cancel the tax registration.

For detailed information about the change, see the link:

https://matsne.gov.ge/ka/document/view/6406655?publication=0

2. Other changes

2.2. Changes in the rules for administering pension contributions

It was published on February 2025, 13, and the amendment entered into force immediately after publication "On the rules for paying pension contributions, forms for submitting information, administration of overpaid amounts, accrual of pension contributions to an individual pension account, expenses, excess income, losses, other income, profits and losses" In the order No. 2019 of the Director of the Pension Agency, a legal entity under public law, dated July 30, 002.

As a result of the change, Several new functionalities have been generated in the Pension Agency's electronic system, about which we present detailed information:

Comparison functionality

A comparison functionality has been added to the Pension Agency's electronic system, through which the employer/self-employed/non-standard employee is given the opportunity to review the results of comparing the data in the electronic system with the information received from the Revenue Service. The comparison functionality also has a comment box, where the employer/self-employed/non-standard employee can indicate a note/explanation if he/she does not agree with the comparison results provided in the comparison functionality.

Annual corrective declaration

In case the employer/self-employed/non-standard employee agrees with the comparison results provided in the comparison functionality, in order to eliminate the fact of under- or over-implementation of pension contributions, he/she is given the opportunity to correct the identified differences in a lump sum for the year, based on the initiation and closing of the annual corrective declaration.

In case the annual corrective declaration provides for the elimination of inadequate performance (full or partial failure to fulfill the obligation to make pension contributions), the existence of the corresponding balance sheet amount is necessary for its closure. In case the annual corrective declaration provides for the elimination of the fact of overpayment of pension contributions, within no more than 5 working days from the closing of the declaration:

• The employer/self-employed/non-standard employee will be refunded the excess pension contribution and accrued benefits (if any) made by the employer/self-employed/non-standard employee in the form of a balance amount;
• The amount of pension contributions made in excess by the state will be transferred to the treasury account, and the interest accrued on it (if any) will be transferred to the unified treasury account of the budget.

The employer/non-standard employee/self-employed person is responsible for the accuracy of the annual corrective declaration, and such declaration may be subject to verification by the Agency during the monitoring process.

Cancellation of participant status in the scheme

In the event that it is confirmed that an employer has mistakenly enrolled an employee in a funded pension scheme that is not covered by the Georgian Law on Funded Pensions, the Agency is authorized to revoke the status of such participant in the scheme without the employer/participant applying. In such a case, the Agency is obliged, no later than 5 working days after the status is revoked:

• Transfer the pension contribution made by the employer in favor, on behalf and at the expense of such a participant and the accrued benefits (if any) to the employer's bank account recorded in the electronic system or to another bank account additionally submitted by the employer through the electronic system;
• Transfer the amount of pension contributions made by the state in favor of such a participant to the treasury account, and the accrued interest (if any) to the unified treasury account of the budget;
• Notify the employer and the participant through the electronic system about the cancellation of the status and the return of pension contributions and accrued benefits (if any) in accordance with this paragraph.

For detailed information about the change, see the link:

https://matsne.gov.ge/ka/document/view/6410873?publication=0

Creston Georgia Ltd

managing partner                                                             Davit Papiashvili

Head of Tax Audit Department                     Chabukiani from Rusu